United States

US moves tentatively towards offshore

UNITED STATES: The US offshore market has been testing the waters for a decade, ever since the flagship 468MW Cape Wind project was first proposed.

A computer-generated representation of the Cape Wind project

That project has been held up by permitting issues and no offshore turbines have yet been installed. But there are increasingly sure signs that the sector may be able to take the plunge relatively soon — whether off the densely populated east coast, in the fresh waters of the Great Lakes or in Texas state waters in the Gulf of Mexico.

The US secretary of the interior, Ken Salazar, says the wind potential off the coasts of the continental US, excluding Alaska, exceeds the US's electricity demand. Nationally, the potential is an estimated 4GW, according to the American Wind Energy Association (AWEA).

A total of 4-5GW of offshore projects has so far been proposed, says Jim Lanard, president of the Offshore Wind Development Coalition, a trade group founded in 2010 by seven offshore wind developers and AWEA.

"Generating power from offshore wind will result in the creation of a new industry in the US, which will lead to the investment of billions of dollars, the employment of thousands of people in high-skilled jobs and significant manufacturing opportunities," says Lanard.

Proposals are in federal and state waters, nearer to shore and where there are already several proposals for demonstration projects. States are vying aggressively to become centres of the US offshore industry because of the jobs the sector will inevitably attract.

Prospects and hurdles

The sector's promise was highlighted in September by the $43 million the US Department of Energy (DOE) awarded for offshore research, development and deployment of technology innovation, manufacturing and infrastructure. The funding is part of the $50.5 million announced in February 2011 with the unveiling of the US national offshore wind strategy, which includes priority target areas for offshore wind development off the east coast to ease pre-permitting.

Progress is apparent in other ways. In mid-September, the Long Island-New York City Offshore Wind Collaborative filed for a lease to secure a site for a 350MW project in federal waters off Long Island. The collaborative includes regional electricity providers New York Power Authority, Consolidated Edison and the Long Island Power Authority.

And by the end of September, the US Bureau of Ocean Energy Management, Regulation and Enforcement is expected to complete environmental compliance for wind projects on the outer continental shelf off several mid-Atlantic states. The regulators say they will likely give a green light for competitive leasing and the first applicant could have secured a lease by year's end.

Yet the timing of the first operating offshore project remains unclear because of an uncertain regulatory market, higher offshore costs and financing problems. Some projects have been slated to see construction start in 2012. But that schedule is expected to slip to 2013, according to some insiders, including Walt Musial, manager of offshore wind and ocean power systems for the DOE's National Renewable Energy Laboratory (NREL).

Ongoing resistance

For example Cape Wind, first proposed in 2001, hopes to start construction in 2012. But the 130-turbine project in Nantucket Sound, Massachusetts - the highest-profile US offshore proposal — is still facing headwinds. On the other hand, the project has successfully weathered many aggressive challenges, notes Fara Courtney, executive director of the non-profit US Offshore Wind Collaborative, an organisation that promotes offshore wind development. She still expects it to proceed next year.

Cape Wind has only sold half of its power output, a problem shared by US developer NRG's 450MW Bluewater Wind project off Delaware, says Amy Grace, lead North American wind-energy analyst for Bloomberg New Energy Finance.

Also, an anti-Cape Wind alliance is challenging the project's power purchase agreement in the state's highest court, saying it should not have been awarded without a competitive bid and that consumers will have to shoulder too-high electricity rates.

Oral arguments were heard in early September.

"We hope to have a decision (from the court) by the end of the year," says Cape Wind project communications director Mark Rodgers.

In the Great Lakes, Ohio-based wind developer Lake Erie Energy Development Corporation expects to start building a 20MW $100 million demonstration project in 2012. And in New England in 2012, the University of Maine-led DeepCwind consortium is to deploy a small floating turbine with a 100-foot (30-metre) tower in deep waters near Monhegan Island, off the coast of Maine.

Other projects boosting the industry include Spanish wind-turbine manufacturer Gamesa's collaboration with Northrop Grumman Shipbuilding — the largest US shipbuilder and a defence industry giant — to develop a 5MW offshore turbine in Virginia. When the deal was announced, Gamesa said it would launch the first prototype, the G11X-5MW, in the final quarter of 2012, with production starting in 2013.

Also in the works is the Google-backed $5-billion offshore transmission backbone, the Atlantic Wind Connection, to connect wind farms along the Atlantic coast. US transmission firm Trans Elect aims to begin construction in 2013. The first phase, off the coast of New Jersey and Delaware, could be in service by 2016.

Strong support

There is strong support for offshore wind from the Obama administration, which recently streamlined the regulatory process under its Smart from the Start programme, reducing by two years the time needed for regulatory approval to between five and seven years.

Support is robust from states too, keen for economic development as traditional industries contract.

But the challenges remain, as the offshore US industry requires vision from political leaders and investment during a tough time economically, says Courtney.

"We can't be short-sighted," she says. "There is a higher cost associated with pioneering projects."

Power purchase agreements are currently hard to come by and offshore costs are undoubtedly higher than for onshore. The public appetite for higher electricity costs is fatigued and financing is harder to find because of the higher costs, says Bloomberg's Grace.

Even in Europe, where there are more incentives for wind, times are tough. GE has said it is scaling back its offshore operations in Norway and Sweden while plans for a UK manufacturing base remain on hold.

In the US, the turbine technology must also be able to weather conditions such as hurricanes in the Gulf of Mexico and off the east coast, and fresh-water ice in the Great Lakes, which can be tougher than the salt-water ice encountered by the industry in the Baltic Sea.

Could the offshore industry be hit by a drop in political support after the next US elections, in late 2012, if Obama fails to win a second presidential term? Lanard, whose organisation lobbies for the offshore sector, is diplomatic. "It's hard to imagine that any administration would stop job creation," he says. "(Offshore wind) is one of the few areas in the US where there is hope for a new industry. In most cases we're trying to revive old industries."

WAITING IN THE WINGS

Paul Garrett

While offshore wind power has yet to take off in the US, the country already has ports experienced in handling turbines and other assets. Wilmington in Delaware, on the East Coast, has been an importation hub for components for onshore wind since 2001 and now has its sights set on North America's offshore sector.

Tom Keefer, the port's deputy executive director, is confident that the experience Wilmington has gained handling 400 vessels and four million tonnes of freight a year will help the port evolve into an offshore wind centre.

Operated by the City of Wilmington from its founding in 1923 until 1995, when it was taken over by the State of Delaware, the port has benefited from $200 million in capital expenditure over the past decade. Keefer says the state's investment has been repaid by returning twice that sum in tax revenues.

"The investment has been in a variety of areas," he says. "There are new quays and cargo-handling facilities on the Delaware River, new warehouses and a mobile harbour crane. The river is now the largest deep-water port complex in the US with a dock length of 5,000 feet (1,500 metres)."

As with many successful ports, geographical location is Wilmington's strong point. On the confluence of the Delaware and Christina rivers, it is 105 kilometres from the Atlantic Ocean, close to major population centres such as Philadelphia and Baltimore, and benefits from its own railway terminus. The 495 highway provides road access to the west and north. "We can service 200 million customers by overnight truck delivery," says Keefer.

Expanding role

Wilmington's traditional role as an importer of fruit from Central and South America for big brands Dole and Chiquita — and as a handler for the automotive, steel and timber industries, and of dry and liquid bulk cargoes — was augmented by the first wind-power cargoes for Enron in 2001 and, more recently, turbine-component handling for GE. Keefer says the port has all that is required to meet the needs of future offshore wind development.

"Offshore wind is going to need deep-water berths," he explains. "Some ships bringing in and taking out turbines are self-sustaining with their own cranes, but because of stowage issues these often cannot be used, at least for the first phase of unloading. Our crane facilities are therefore helpful."

Ample storage for components, such as long blades, is another key requirement for offshore wind. "We have more than 300 acres of land available, a proportion of which is available as a staging facility for offshore wind products," says Keefer.

The port also has space for a wind-turbine manufacturing facility if a developer chooses to build or assemble machines on site. Other plus points include a steel-plate manufacturer 11 kilometres from the port and a trained pool of workers with experience in the automotive industry who could support offshore wind projects, allied with what Keefer describes as "excellent labour-management relations for years".

Role model

The kind of offshore wind hub Wilmington aspires to be has its precedents in Europe. One of the biggest is Bremerhaven in northern Germany, which serves wind farms in the North Sea and is also a turbine-manufacturing and research and development centre. "We have visited Bremerhaven and would like to emulate that model," says Keefer.

The nearby University of Delaware has been a leader in offshore wind-energy research for a number of years through its Center for Energy and Environmental Policy. "The intellectual capital there could create a centre of excellence similar to that at Bremerhaven," Keefer suggests.

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